Apple files motion to intervene in Lodsys patent lawsuit

Apple won't sit idly by while iOS developers are threatened with patent …

Apple has filed a motion to intervene in the patent infringement lawsuit that Lodsys slapped on seven iOS developers last Tuesday. The company maintained that its license for Lodsys patents allows developers to use in-app purchase APIs, and that it has a right to intervene since its licensed technology is at issue.

Lodsys has more than the full weight of Apple's legal might to worry about, however. While Apple's defense rests solely on its license covering the sued developers, Lodsys' portfolio of four patents is also claimed to be invalid by ForeSee Results, whose clients have been similarly threatened with patent infringement claims for using its survey technology.

Lodsys first caught our attention when it began sending letters to iOS developers informing them that their use of Apple's in-app purchase APIs violated at least one of its four patents, in particular citing US Patent #772,078, "Methods and systems for gathering information from units of a commodity across a network." Lodsys demanded that developers pay a small but non-trivial licensing fee or else face a patent infringement lawsuit in 21 days.

Developers believed Apple should step in and help, since Apple made the APIs that enabled the in-app purchasing that Lodsys claimed violated one or more of its patents. Apple sent a stern letter to Lodsys, noting that it had already licensed the patents in question from the previous owner, Intellectual Ventures. Apple claimed that its license extended to its customers and business partners, including developers using its in-app purchase APIs.

Lodsys didn't buy Apple's explanation, however, and filed a lawsuit against seven independent developers on May 31. The lawsuit, filed in the patent-holder-friendly Eastern District of Texas, claimed that developers' use of in-app purchasing violated two of Lodsys' patents.

The lawsuit put independent developers in a bind, because defending against a patent lawsuit is typically very expensive—in other words, something most small developers couldn't afford. Without an Apple-sized bankroll, the typical independent developer would have no choice but to settle and pay a license fee. Doing so would only encourage Lodsys to go after more developers.

Apple's motion to intervene could prove a major thorn in Lodsys' side. Apple argued in its motion that is has the right to intervene because it has a vested interest in the property at issue, namely Lodsys patents for which Apple holds a license to use. Furthermore, Apple claimed, independent developers "lack the resources to fully and fairly litigate the issue of whether Lodsys’s claims are exhausted" under the doctrines of first sale and exhaustion.

"While the Developers will likely be interested in resolving this case as quickly and inexpensively as possible, Apple's interest is in protecting its broader license rights with respect to thousands of App developers for Apple products who may be the subject of future Lodsys lawsuits or threats," Apple said in its motion.

It's up to the judge whether to allow the intervention, but Apple's motion appears well pleaded and cites similar cases where Intel and Microsoft intervened in patent disputes when licensing was in question.

Lodsys is also facing a serious threat to its entire business model from ForeSee Results, whose clients have been targeted with legal threats for using ForeSee's survey tools on their websites. ForeSee has filed a federal lawsuit asking the court for declaratory judgement that Lodsys' four patents are invalid.

FOSS Patents noted that ForeSee's suit was filed in the Northern District of Illinois, as it claimed that while Lodsys is legally incorporated in Eastern Texas (largely for the benefit of filing patent infringement lawsuits there), its CEO and allegedly sole employee Mark Small actually operates out of Illinois. "By suing in another district first, ForeSee has greatly reduced the likelihood of any infringement assertions against its customers being decided in the Eastern District of Texas," FOSS Patents said.

If ForeSee is successful, the move could also have benefits for iOS and Android developers that have been likewise accused of infringing Lodsys' patents. If declaratory judgement is entered before the trial in Eastern Texas is over, Apple and developers could move to have the lawsuit dismissed.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

Shut down? Nope. And the E.D.Tex. has been patent-holder friendly for years. However, the Federal Circuit, which hears all patent-case appeals, has been showing more flexibility in allowing cases to transfer out of the E.D.Tex. to venues that make more practical sense.

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

They may simultaneously go after Android devs, but if Apple gets them to back down cheaply, Google will most likely have no problem doing the same. 1. )it's good PR and 2.) in that case it'd be relatively cheap.

Lodsys should have consulted Stephen Colbert on tips for hornet's nest handling before filing suit against these developers.

Lodsys knew Apple would intervene. I am confident their attorneys did this on purpose for some strategic reason

I don't think the Attorneys care either way, they'll collect their "Lawyerin' fees", as they call it in Texas(not really) regardless.

It's likely Lodsys' "CEO" falling under the textbook troll mentality of "I'm different from the rest of them, I can do it better, just watch!" and proceeding charge into the dirt face first like the rest of them.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

Shut down? Nope. And the E.D.Tex. has been patent-holder friendly for years. However, the Federal Circuit, which hears all patent-case appeals, has been showing more flexibility in allowing cases to transfer out of the E.D.Tex. to venues that make more practical sense.

What I don't get is how a court can be patent friendly. Isn't the whole point of a court to look at evidence on balance and make a rational decision? I know it's a bit optimistic to expect a completely fair outcome 100% of the time but I still don't understand why ED Texas consistently hands out favourable judgements and gets away with it.

Just out of interest, do these cases have a jury made out of members of the general public? If so, that seems incredibly stupid.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

It's a Federal court system.

Keep in mind that it has absolutely nothing to do with the state of Texas or anything else going on in Texas. It's called East Texas, because that is the location of that particular district court.

He is a pro-patent district Judge appointed by Bill Clinton in 1999. (Just for the record we can thank Bill for the DMCA, too. But don't work Obama and the current Congress is busily working to expand the power of patents, too.)

What can do you about that Judge?

Nothing really. It's virtually impossible to impeach him. He is appointed to life and it's up to him to decide whether or not he wants to retire when he gets to 65 or so. He could go out a murder a prostitute Grand Theft Auto-style, on camera, and get successfully prosecuted for it, and it would still require a act of Congress (literally) to get him out of office.

He is completely isolated from any sorts of consequences from his decisions. The worst thing that could possibly happen to him is he would get censored by other Judges, which is basically the legal equivalent of getting dirty looks from your co-workers. He does what he wants and he runs his court how he wants and there is nothing you can do about it.

But that's ok, you have the power to vote. Right, remember?

So yeah write to your congressmen, tell them that you don't like software patents, and then be ignored because despite all the propaganda to the contrary... nobody cares about your vote.

Democracy: There is no cake.

What you can actually do that is more effective is join some (or start) a non-profit corporation dedicated towards abolishing patents. Then you can work with other people and pool your resources to fight and embarrass the government into acting. That is, until somebody decides to reverse the 'citizens united' case or impose some more campaign finance reform which will further erode your rights to free speech.

Lodsys should have consulted Stephen Colbert on tips for hornet's nest handling before filing suit against these developers.

Lodsys knew Apple would intervene. I am confident their attorneys did this on purpose for some strategic reason

That seems like a silly statement. Patent trolls specifically tend to target companies that will roll over and buy a license from them without a legal fight. You're suggesting that they went after a bunch of small developers specifically to pick a fight with a giant company with tons of cash and every reason to fight this to the bitter end? The cost/benefit ratio to that strategy doesn't seem to pencil out on that.

What you can actually do that is more effective is join some (or start) a non-profit corporation dedicated towards abolishing patents. Then you can work with other people and pool your resources to fight and embarrass the government into acting. That is, until somebody decides to reverse the 'citizens united' case or impose some more campaign finance reform which will further erode your rights to free speech.

Isn't that what Stephen Colbert is trying to do? Reversing Citizens United case is paramount to American democracy IMHO.

Judicial activism is a hot knife through butter on some issues, Civil Rights for example.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

Shut down? Nope. And the E.D.Tex. has been patent-holder friendly for years. However, the Federal Circuit, which hears all patent-case appeals, has been showing more flexibility in allowing cases to transfer out of the E.D.Tex. to venues that make more practical sense.

What I don't get is how a court can be patent friendly. Isn't the whole point of a court to look at evidence on balance and make a rational decision? I know it's a bit optimistic to expect a completely fair outcome 100% of the time but I still don't understand why ED Texas consistently hands out favourable judgements and gets away with it.

Just out of interest, do these cases have a jury made out of members of the general public? If so, that seems incredibly stupid.

In a nutshell, yes, the jury is made up of members of the public, and yes, it is incredibly stupid because of how the jury is instructed to evaluate patent cases.

When I say that it may "go to trial", bear in mind that this case will be put before a jury in East Texas (unless someone successfully gets it transferred to another district, which is a long shot at this stage). That court is known to process these cases relatively swiftly (by comparison with most other U.S. district courts) and to hand a high percentage of patent holder-friendly decisions.

...It's not only known for judges who tend to be on the patent holders' side but also juries that are easily persuaded by the idea that lone "inventors" (such as Mr. Abelow, whose patents are now asserted by Lodsys) should be protected against "infringers". The ability of those juries to understand technical issues (such as the API issues at the core of Apple's letter to Lodsys) is often criticized. Red Hat CEO Jim Whitehurst claims that in that court you "generally [find] a jury that has not completed college." That statement is too condescending for my taste, but to give you an idea, in the dispute that resulted in RIM's famous $612.5 million settlement with NTP, the closest thing to a patent expert on the entire jury was a high school teacher.

So assuming you as a defendant aren't already bankrupt before the jury convenes, you have to assume that the judges in that district will brief the jury in a patent holder-friendly way and Lodsys's lawyers would tell them the story of how you steal Mr. Abelow's intellectual property. Against that background, the jury may hand a verdict against you, possibly awarding millions of dollars in damages. And then there may still be lawyers who say that the jury was wrong and you should have the decision overturned, but then you'll have to appeal to the Court of Appeals for the Federal Circuit, which you may not be able to afford.

Does it really count as a public API when you have to apply to be a developer for a closed system?

Yes. Public and Private API:s are computer terminology where Public API:s are solid, tested non-breaking, well documented, fully supported and not subject to random changes. Private API:s on the other hand are subject to sudden changes as the API is maturing, not fully tested, not supported, possibly breaking and not really documented. It has nothing to do with licensing other such philosophical matters.

Just like Master and Slave does not signify a legal ownership of one box of tech over another box of tech.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

Shut down? Nope. And the E.D.Tex. has been patent-holder friendly for years. However, the Federal Circuit, which hears all patent-case appeals, has been showing more flexibility in allowing cases to transfer out of the E.D.Tex. to venues that make more practical sense.

A related issue which might be more easily fixed is that patent plaintiffs use flimsy pretexts for filing in EDTX. Any national corporation 'does business' in EDTX and sometimes is sued there based only on that.. And I think there's been a few cases of plaintiffs maintaining an empty office in the district that never gets used, just so they technically have an EDTX address and therefore can file suit in the district, even if most of their business actually happens in other states.

I'd really like to know if there is some sort of check in place to stop what is happening in Eastern Texas. I know there are appeals for individual cases, but can't an obviously biased court be shut down by some higher court or government entity?

Shut down? Nope. And the E.D.Tex. has been patent-holder friendly for years. However, the Federal Circuit, which hears all patent-case appeals, has been showing more flexibility in allowing cases to transfer out of the E.D.Tex. to venues that make more practical sense.

What I don't get is how a court can be patent friendly. Isn't the whole point of a court to look at evidence on balance and make a rational decision? I know it's a bit optimistic to expect a completely fair outcome 100% of the time but I still don't understand why ED Texas consistently hands out favourable judgements and gets away with it.

Just out of interest, do these cases have a jury made out of members of the general public? If so, that seems incredibly stupid.

In a nutshell, yes, the jury is made up of members of the public, and yes, it is incredibly stupid because of how the jury is instructed to evaluate patent cases. A more detailed explanation from FOSS Patents' Florian Mueller, quoted at length:

Florian Mueller wrote:

When I say that it may "go to trial", bear in mind that this case will be put before a jury in East Texas (unless someone successfully gets it transferred to another district, which is a long shot at this stage). That court is known to process these cases relatively swiftly (by comparison with most other U.S. district courts) and to hand a high percentage of patent holder-friendly decisions.

...It's not only known for judges who tend to be on the patent holders' side but also juries that are easily persuaded by the idea that lone "inventors" (such as Mr. Abelow, whose patents are now asserted by Lodsys) should be protected against "infringers". The ability of those juries to understand technical issues (such as the API issues at the core of Apple's letter to Lodsys) is often criticized. Red Hat CEO Jim Whitehurst claims that in that court you "generally [find] a jury that has not completed college." That statement is too condescending for my taste, but to give you an idea, in the dispute that resulted in RIM's famous $612.5 million settlement with NTP, the closest thing to a patent expert on the entire jury was a high school teacher.

So assuming you as a defendant aren't already bankrupt before the jury convenes, you have to assume that the judges in that district will brief the jury in a patent holder-friendly way and Lodsys's lawyers would tell them the story of how you steal Mr. Abelow's intellectual property. Against that background, the jury may hand a verdict against you, possibly awarding millions of dollars in damages. And then there may still be lawyers who say that the jury was wrong and you should have the decision overturned, but then you'll have to appeal to the Court of Appeals for the Federal Circuit, which you may not be able to afford.

Thanks for that post - very informative.

Might be good to go the way of complex fraud cases in the UK and remove juries (who even with the best will in the world are simply not capable of understanding the complexities of these kinds of cases). Problem is you're just left with a judge who is "patent friendly" - but at least then he has to stand by his record rather than point to a jury.

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

About Google: They have already sued a couple of Android developers, specifically for their Android apps, so Google is already involved -> Lodsys might need to take on both Apple & Google. Fun!

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

About Google: They have already sued a couple of Android developers, specifically for their Android apps, so Google is already involved -> Lodsys might need to take on both Apple & Google. Fun!

Sounds like taking on the 100 pound gorilla with 500 pounds of money in his pockets.

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

If they withdraw on the Apple cases, Googles lawyers will simply argue for a declatory judgement that the cases against Android developers have no merit based on the same reasoning as in the Apple cases. Its more likely though Google will follow Apples lead and file to intervene. Its suddenly become a dangerous game that Lodsys are playing since not only is their business model at risk but the very collateral the company depends on may declared invalid and thus worthless. Don't be surprised to find Lodsys either goes all in or withdraws suits to preserve the patent status. I would hope though Foresee press ahead and gets a judgement anyway.

And this shakedown of some small-fry developers just got really expensive for Lodsys. My question is whether they try to keep going, despite them probably rather quickly blowing through more money fighting this with Apple than the money they would have received through licensing, or if they withdraw the lawsuits, and see if they can pick a fight with Android developers without Google jumping in like Apple did.

About Google: They have already sued a couple of Android developers, specifically for their Android apps, so Google is already involved -> Lodsys might need to take on both Apple & Google. Fun!

So where the fuck is Google in all of this? I haven't heard or seen a peep from them. You are assuming that Google would even lift a finger to defend the developers being sued, past history tells me that may not be the case.

What you can actually do that is more effective is join some (or start) a non-profit corporation dedicated towards abolishing patents. Then you can work with other people and pool your resources to fight and embarrass the government into acting. That is, until somebody decides to reverse the 'citizens united' case or impose some more campaign finance reform which will further erode your rights to free speech.

Isn't that what Stephen Colbert is trying to do? Reversing Citizens United case is paramount to American democracy IMHO.

Judicial activism is a hot knife through butter on some issues, Civil Rights for example.

I agree. Big Corporations should not be granted "rights".

The New York Times, the Huffington Post and Daily Kos should not get to indulge in "Freedom of speech, or of the press".

Those rights are for individuals only. The government should be able to silence them and a government panel of arbiters should decide what they should be able to say.

So where the fuck is Google in all of this? I haven't heard or seen a peep from them. You are assuming that Google would even lift a finger to defend the developers being sued, past history tells me that may not be the case.

Apple didn't show up immediately to the fight. They took a while. They sent a letter. Now they've jumped in. (If I've followed the events correctly)